Brazil's Alunorte Refinery Cuts Alumina Output to 50% After Gas Supply Failure

Norsk Hydro confirmed on August 11, 2026 that its Alunorte refinery in Barcarena, in the Brazilian state of Para, had cut alumina production to 50 percent of capacity after its natural gas supplier notified the plant of disruptions to gas availability. Alunorte is the largest alumina refinery outside China, with a nameplate capacity of 6.3 million metric tons per year, and Hydro holds 92.1 percent of the asset. Around two tons of alumina are needed to produce one ton of primary aluminium, so halving output at a plant of this size withdraws a significant share of the alumina available to smelters outside China.

The supplier is CELBA, a Brazilian gas and power company that belongs to the New Fortress Energy group. CELBA also owns the liquefied natural gas import infrastructure at Barcarena, where a floating storage and regasification unit delivers gas to the local industrial cluster. Alumina refining depends on continuous high-temperature heat and steam, which makes the process highly sensitive to any interruption in fuel supply. Without a stable gas flow, the refinery has no practical way to hold output at design levels.

Hydro stated that the supplier is trying to source gas on market terms compatible with its current financial situation. That wording points to the balance sheet problems that have weighed on New Fortress Energy since late 2025, when the group missed interest payments across several debt instruments. A restructuring support agreement was signed on March 17, 2026 with creditors holding the large majority of the debt. The English High Court sanctioned two interconnected restructuring plans on June 18, 2026, removing roughly 9.6 billion dollars of debt, and a United States bankruptcy court granted Chapter 15 recognition on June 26, 2026. The group has also been separating its Brazilian assets, including the Barcarena terminal and the CELBA power plants, into a standalone platform. For alumina buyers, the practical consequence is that the reliability of the gas feed into Barcarena now depends in part on the financing capacity of a company still working through a restructuring.

Alunorte has put contingency measures in place rather than waiting for the supplier to restore volumes. The refinery is buying spot gas cargoes, which cost more than the volumes contracted under its long-term agreement, and it has asked for direct access to the Barcarena receiving and regasification terminal so it can bring in its own gas instead of relying on CELBA as an intermediary. Production has been aligned with whatever gas volumes are actually made available. Hydro said Alunorte will begin ramping back toward full output as soon as gas availability normalizes, and the company is pursuing long-term alternative gas supplies while preserving its rights under the existing Gas Supply Agreement, language that leaves the door open to a contractual claim against the supplier.

Hydro has not put a figure on the total cost because the duration of the disruption is unknown. It has estimated that the combination of lower alumina volumes and the purchase of gas above contract price could reduce third quarter 2026 results for the Bauxite and Alumina segment by 75 to 100 million dollars. That range assumes a temporary event rather than a structural loss of supply. A disruption running deeper into the fourth quarter would push the figure higher, particularly if spot cargo prices stay elevated.

The market reaction was immediate. Benchmark three-month aluminium on the London Metal Exchange gained as much as 2 percent on August 11 to reach 3,382.50 dollars a ton, the highest level since June 22. Prices eased slightly on August 12, trading close to 3,340 dollars a ton, but the metal remains up around 6 percent since the start of August and roughly 28 percent higher than a year ago. Alumina futures in Shanghai also moved higher. Shares in aluminium producers outside Brazil rose on the expectation of tighter feedstock supply, with NALCO gaining close to 9 percent and Hindalco around 4 percent in Indian trading on August 12.

The disruption lands on a market that was already tight. Primary aluminium output outside China fell 6.7 percent year on year in July, driven mainly by reduced operating rates at Middle Eastern smelters, and LME warehouse stocks have dropped to their lowest level this century. Hydro itself has been managing a second energy-driven problem since March 2026, when its Qatalum joint venture in Qatar began a controlled shutdown after QatarEnergy warned of a gas supply suspension linked to the regional conflict. Qatalum has since stabilized at around 60 percent of its 636,000 ton capacity, and Hydro has issued two separate force majeure notices connected to that site, the second following the termination of its marketing agreement in June. The Brazilian gas problem therefore hits a producer that has already lost flexibility elsewhere in its portfolio.

There is also a direct downstream effect inside Barcarena. The Albras smelter, 51 percent owned by Hydro with the remainder held by Nippon Amazon Aluminium, sits next to the refinery and takes its alumina from Alunorte. Part of Alunorte output is exported and part feeds Albras, so a sustained reduction at the refinery raises questions about feedstock continuity for the neighbouring smelter. Hydro has not announced any curtailment at Albras at this stage.

As of August 12, 2026, the refinery is still running at half capacity and no restart date has been communicated. Buyers with exposure to Brazilian alumina should treat the situation as unresolved and plan for a period of higher spot prices. The key variable is not technical, since no equipment has been damaged, but commercial and financial, since recovery depends on whether the supplier can secure gas volumes it can afford to deliver, or whether Alunorte succeeds in obtaining direct terminal access and arranging its own imports. Either path could take weeks.